The National Policy on Electronics, which targets domestic production of electronics goods to touch USD 400 billion by 2025 against the current around USD 80 billion, has been approved by the union cabinet on February 19, 2019. The policy proposes interest subvention scheme, wherein it is suggested that an interest subsidy of 4 percent will be provided on loans of up to Rs 1,000 crore on plant and machinery. In case of a larger loan, subsidy will be limited to Rs 1,000 crore.
Other scheme proposed under the policy is credit guarantee fund scheme, which will create a fund to provide default guarantee to the banks up to 75 percent of the loan on plant and machinery for loans of up to Rs 100 crore. This will eliminate the need for small and new investors to provide third-party collateral currently being demanded by banks for giving such loans. The scheme will be on the pattern of credit guarantee being provided by SIDBI for the SME sector. Revised electronics manufacturing clusters will replace the existing scheme. As per the revised cluster scheme, support for creating infrastructure and common facilities will be provided in collaboration with state governments. It is also being proposed to create a sovereign patent fund to acquire IPs for chips and chip components so that it can be made available to Indian entrepreneurs at very low cost. The government has proposed to provide suitable direct tax benefits for setting up a new manufacturing unit or expansion of an existing unit. The policy also proposes to promote a forward looking and stable tax regime, including advance intimation to the industry to plan investments in the form of phased manufacturing programme in various segments of electronics, with a sunset clause.